Company's Actions Hurt DM Industry

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Image Data's existence is a disaster for the direct marketing industry. The New Hampshire company, which wanted drivers' license photographs for a fraud prevention program, was initially successful in getting several states to agree to provide the photos - but when the drivers' photo story became public in January, it produced one of the strongest and most spontaneous public outbursts over privacy.


In three different states, the public was incensed by disclosure of their photos. Politicians who previously supported the Image Data proposal immediately turned around and marched the other way. The disclosures ended. The situation got even worse when the Washington Post reported later that Image Data received federal funds to support use of its technology for law enforcement and immigration control. It seems that the company said its system would be used only to prevent check and credit card fraud.


Although Image Data's plans to use photos ended with the initial news coverage, the story doesn't end there.


Sen. Richard Shelby, R-AL, who had not previously been known as a privacy advocate, decided that consumer privacy needed more protection.


As chairman of the Senate appropriations subcommittee on transportation, he had a way to deliver, and his first target was driver information.


As previously reported, Shelby offered a drivers' license privacy amendment to the appropriations bill that he controlled. His original proposal was so restrictive that even motor vehicle regulatory activities and law enforcement agencies would have been prevented from obtaining information.


It is interesting to contrast the passage of the 1999 Shelby amendment with the 1994 Drivers Privacy Protection Act. The marketing industry and others heavily lobbied both proposals. In 1994, most users of drivers' records were able to achieve a compromise. For example, the DPPA allowed marketing uses of drivers' information with an opt-out. It was as strong a privacy law as was possible in 1994. This year, some interest groups were able to wrangle changes so the final Shelby amendment was not as restrictive as the initial proposal.


But marketers got stiffed. Despite intense lobbying by the Direct Marketing Association and its members, the Shelby amendment now requires an opt-in for marketing uses of drivers' data. The industry was not able to find a member of Congress to counter Shelby.


No one wanted to get caught going to bat for the marketers.


The amendment may have other effects, too. Marketers had been hoping that the Supreme Court would find the original drivers' privacy law to be unconstitutional. However, the new law throws a monkey wrench into the litigation.


The constitutional battle over DPPA is being fought over federalism. Can the federal government tell the states what to do in this arena? The amendment ties the data restrictions to federal funds, and this may make the federalism argument irrelevant, although not necessarily moot. I would not be surprised if the Supreme Court sent the case back to a lower court for reconsideration.


As a result of its privacy tone-deafness, horrendous public relations, worse governmental relations and general bumbling, Image Data has done more to advance privacy legislation than the guy who killed TV actress Rebecca Schaeffer.


For better or worse, Image Data also contributed to the creation of a new privacy player: Shelby went from his success with drivers' data to seek increased privacy protections in the major banking bill before Congress. He lost, but Shelby's interest in privacy is not likely to fade soon.


Meanwhile, marketers don't need any help from Image Data to shoot themselves in the foot. The industry continues to sell any list to anybody, whatever the consequences. In the Oct. 4 issue of DM News, I spotted an announcement of a new list from Dunhill that includes the names, addresses and phone numbers of congressional staff members. The list was touted as useful for selling Internet services, travel and investments.


What a brilliant coup for the industry. Bury all those congressional staffers in junk mail and phone calls. Make sure that you call Shelby's staff twice.


It's time for the industry to find a new game plan because the old one is in tatters. Maybe the first order of the day should be to buy Image Data and close it down.


Robert Gellman is a Washington-based privacy and information policy consultant and former chief counsel to the U.S. House subcommittee on information, justice, transportation and agriculture. His e-mail address is rgellman@cais.com.
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